Financial Statement Analysis Chp006

4811 WordsNov 12th, 201320 Pages

Chapter 06
Analyzing Operating Activities

Multiple Choice Questions 1. Which of the following is not a reason for economic income and accounting income to differ?
A. Transaction basis
B. The monetary assumption
C. Conservatism
D. Earnings management 2. As a general rule, revenue is normally recognized when it is:
A. measurable and earned.
B. measurable and received.
C. realizable and earned.
D. realizable. 3. Which of the following measures of accounting income is typically reported in an income statement?
A. Net income
B. Comprehensive income
C. Continuing income
D. All of the above 4. According to FASB, initial franchise fees should be recognized as income when:
A. the franchiser has substantially performed or satisfied…show more content…

$185M
B. $172M
C. $158M
D. $157M 16. If software refinement had been capitalized each year and amortized over a three year period beginning in the year the cost was incurred, net income for fiscal 2007 would have been:
A. $31.7M
B. $29.75M
C. $21.95M
D. $14.95M 17. If the software refinement had been capitalized and amortized over a three year period beginning in the year the cost was incurred, but was expensed for tax purposes, the deferred tax position at the end of fiscal 2005 would have been:
A. A deferred tax credit of $2.8M
B. A deferred tax credit of $3.5M
C. A deferred tax credit of $5.2M
D. A deferred tax debit of $4M 18. If a company that normally expenses advertising costs was to capitalize and amortize these costs over 3 years instead:
A. after the third year net income would always be higher if it is capitalized.
B. after the third year net income would always be lower if it is capitalized.
C. after the third year net income would be higher (if it is capitalized) only if advertising costs were increasing.
D. after the third year net income would be lower (if it is capitalized) only if advertising costs were increasing. 19. Compared with companies that expense costs, firms that capitalize costs can be expected to report:
A. higher asset levels and lower equity levels.
B. higher

Financial Statement Analysis and Financial Forecasting
4.1 Introduction. The lesson will consist of basic financial statements, its relevancy, reliability and quality as a basis for making decisions. Focus on the decision-making role of accounting system has to be elaborated. Also ratio analysis as decision tool with forecasting models is discussed. The basis concept of preparation of financial statement and its usefulness is included with ratio analysis. Cash flow analysis and financial planning…

FEMSA 2007: THE FINANCIAL STATEMENT ANALYSIS IMPACT OF DIFFERENCES IN MEXICAN AND US GAAP
1. Compute the following ratios for 2007 using the financial statements prepared using Mexican FRS and expressed in pesos. [Assume the weighted average number of shares outstanding is 17,891,000]
a. Current Ratio: Current assets/Current liabilities
b. Inventory Turnover: Cost of Goods Sold/Average Inventory
c. Profit Margin on Sales: Net Income/Net Sales
d. Debt to Assets Ratio:…

Financial Statement Analysis
MBA 6150
Financial Statement Analysis – Verizon Communications
Abstract
The process of developing financial statements for a business is to provide supporting documentation to what has been reported as annual or quarterly income. Within the financial statement analysis strengths and weaknesses are identified through the comparison of data from the balance sheet. There are many different ways to interpret the data that is utilized for the analysis; those…

Chapter 2
Introduction to Financial Statement Analysis
2-1. What are the four main financial statements? What checks are there on the accuracy of these statements?
The four financial statements are: the balance sheet, the income statement, the statement of cash flows, and the statement of changes in shareholders’ equity. Financial are required to be audited by a neutral third party, who checks and ensures that the financial statements are prepared according to GAAP or accounting standards…

information to those that need it (Siam, & Rashid, 2010). Financial statements analysis is very important to various users because it helps to express the overall financial health of the organization (Gibson, 2013). Managers use the financial statements to measure the profitability of a company, manage day to day activities and make important decisions about pricing, production that will benefit the organization (Gibson, 2013). Financial statements are also used to form contracts between organizations…

Woolworth Financial Analysis
Financial statement analysis assists a business entity, business shareholders and other people interested, to analyze the figures in financial statements to present them with superior information about such most important factors for decision making and ultimate business survival. As exemplified by Gibson (2001), income statement, balance sheet, and cash flow statements project the financial performance a company at the present and probably the future. According to the…

Analysis of Financial Statements
Financial statements are frequently a key source of information for financial decisions and taking a look at Microsoft’s financial statements can help us decide certain things about the company. There are three different types of statements that will be discussed in this section. These include: the balance sheet, the income statement, and the statement of cash flows. They are discussed here in either the sense of quarterly or yearly statements and will be noted…